by Dante Disparte

Climate change demands immediate action—from organizations, governments, and society alike. But business leaders often find themselves asking, how? How should companies respond? What steps are effective given operating and financial constraints? What can realistically move the needle for an issue so vast? Will shareholders and other stakeholders forgive potentially inferior returns in favor of global longevity? This last question underscores the fundamental tension between those organizations that want as much as they can have as fast as they can have it and those who want to stretch the economically viable horizon for as long as possible. Climate change should push every leader, every industry, every country, and every person to aim for long-term prosperity.

Against these questions, responses to climate change have often erred on the side of incrementalism—or, worse yet, token steps bordering on “greenwashing” or marketing campaigns. There is good news, though. First, there are real measures leaders can put in place to position their firms (and collectively, the planet) on a path to equilibrium, resilience, and competitive advantage. Second, stakeholders can see through the thin veneer of greenwashing and expect enterprises to rise to the occasion.

In the last 20 years, there have been more disaster declarations in the United States than the preceding 50. The cluster of multibillion-dollar disasters, including Hurricanes Katrina, Sandy, Maria, Irma, and Harvey, were in concentrated areas, showing the link between extreme weather and rising temperatures. Hurricane Harvey, for instance, was the wettest storm in U.S. history, turning Houston, Texas, into a lake. Hurricane Maria triggered the second-longest blackout in history, plunging the U.S. territory of Puerto Rico into six months of darkness and claiming more than 3,000 lives. California’s fire seasons, meanwhile, courtesy of a progressively hotter and drier environment, have worsened each year, with the 2018 Camp Fire being the deadliest and costliest on record, triggering what may be the first climate change bankruptcy of the electric utility, PG&E.

The same pattern holds true around the world, with unprecedented speed and scale. Typhoon Haiyan in the Philippines caused the worst recorded blackout in history, showing how critical infrastructure, as currently designed, can be a single point of failure. Australia’s record 2019 bushfires caused devastation across the continent, killing over a billion animals and causing some species to go extinct. The last decade has been the hottest in history, which creates an environment where vector-borne diseases, like Zika, will continue their inexorable march north. The threat of communicable diseases and pandemics, like COVID-19, will also thrive in a world where climate change goes unchecked. While climate science and mitigation efforts often focus on large-scale impacts, climate risk is both attritional and acute when it comes to critical infrastructure that keeps the global economy going.

In the face of such threats and catastrophes, the private sector has the wherewithal, ingenuity, and balance sheet to make a material difference. Some businesses are already leading the charge. Clothing companies like Patagonia and H&M have been encouraging customers to use less by repairing clothing, embracing a business model of degrowth. Investors and banks, like HSBC, are looking to offer deals and funding to companies that emphasize sustainability. Other companies have made carbon reduction a priority—and partner with suppliers that do the same—in order to align themselves with the Paris Agreement and reach net-zero emissions by 2050.

Organizations must follow these examples for the sake of the earth and future generations. There is opportunity in responding to climate risk, and leaders must have the clarity to make the right choices to position their firms for longevity.